Money, in its highest manifestation, is gold. However, silver can also be money, though not as aptly as gold.
Money is, has always been, and always will be a commodity. Bitcoins, as well as Dollars and all other currencies today, are not and cannot be money, because they are not commodities.
In trade, all commodities exhibit what is called a "declining marginal utility", with one notable exception.
Carl Menger (1840-1921, Vienna) illustrated the phenomenon of declining marginal utility by the example of a farmer who owns a wheat field. Suppose he only gets one sack of wheat from a crop. This is the most valuable, and he will use the wheat to feed his family. Each successive sack of wheat obtained by the farmer is devoted to progessively less valuable applications; finally, there comes a point where the farmer uses the last incoming sack of wheat to feed his pet canary.
Thus, as we own more of a given good, the less valuable to us is the last good. The "marginal utility" of a good declines as we have more of that good.
Gold is a commodity: we can make jewelry and ornaments out of it, and it has some industrial applications, and gold is also money because if we are to receive a payment, we will apply virtually no discount on the value of the gold we receive, no matter how great the sum is. We will value the last coin received just as highly as the first. It is the exceptional commodity in this respect.
The "declining marginal utility" of gold is, for all practical purposes, non-existent. That is why it is money, as well as a commodity.
Bitcoins and Dollars - and all currencies - are not "commodities"; they are nothing but numbers and have no substance.
Ever since August 15, 1971, when President Richard M. Nixon ceased to deliver gold to the holders of Dollars who had been promised gold in exchange for their Dollars, the world has not been enjoying the use of money. Instead, it has been using simple numbers, and those numbers are now in the trillions upon trillions.
What took place in 1971 was a deadly disconnect between the rational faculty of humanity and the reality of the physical world.
The rational faculty of humanity / "false money" / the reality of the physical world: false money stands between us, and the physical world in which we live.
Humans can act effectively to achieve their subsistence when they approach the problems of the physical world through the medium of money, i.e. gold and to a lesser extent, silver.
Humanity today is struggling to maintain and further the industrial and commercial activity of the world that was established when gold was money. To realize that what we have today is total chaos, all we have to do is to read the daily papers. This chaos prevails because humanity is no longer in contact with the realities of the physical world: rational human activity is disconnected from those realities, by the false money i.e. the numbers, which lie between us and the physical world upon which we must act according to reason.
When we are no longer in contact with reality, we are diagnosed with mental illness; in other words, we are crazy. Thus, the world can be said to be crazy, because it can no longer act rationally upon the physical world due to the intermediation of false money - numbers - through which it has a falsified access to Reality.
The existence of a mental block, consisting of numbers used as "money", between reasoning humanity and the physical world is a matter of paramount concern.
The success of Bitcoin is a good illustration of the intellectual confusion of crowds. The Bitcoin is a digit, a number. The only special characteristic of this number is that it moves about the Internet within a carefully controlled system which prevents unauthorized access to it. Only the owner of the Bitcoin digit, can dispose of it by sending it to someone else. The Bitcoin is enjoying a spectacular rise in "value" against the Dollar, because people are paying Dollars to own a Bitcoin; and people are paying ever more Dollars to own a Bitcoin, because - people are paying ever more Dollars to own a Bitcoin. Is this reasonable? Humans are not behaving reasonably because the false monetary system has blocked their thinking. (Probably, some Bitcoin speculators - and I suspect there are a great many of them - know that the whole thing is going to break down, but think they can leave the game before it craters.)
Another curious manifestation of the intellectual effects of this "numbers money" mental block is the support given, in all seriousness, on the part of important people to lunatic projects such as the establishing of a human colony on Mars. There is another lunatic project to control the world's climate. Humanity has lost touch with Reality, due to false money, and the list of lunacies is endless. Perhaps the sanest people in the world inhabit the jungles of New Guinea and the remote Amazon river basin - they use no money at all.
The final manifestation of the consequences of the presence of a mental block between human action and the reality of the physical world, will be, inevitably, a total, absolute breakdown of conditions in our present world, which as I have said, is struggling in vain to maintain and further industrial and commercial activity as it existed prior to the banishment of gold as money, in 1971. Shades of "Atlas Shrugged"!
And if, by some almost miraculous change, gold should come back into use as the world's money, we have to consider how a totally confused world might cope with that change: could it be, perhaps, by opting for a wholesale, suicidal destruction of the human race, rather than an adaptation to new habits, new employments and reordering of priorities which the rational understanding of the world will require, once the mental block of "numbers-money" is removed?
In Shakespeare's comedy, "A Midsummer Night's Dream" - a group of lovers in a wood are put under a spell by a fairy, and enter into silly capers, giving rise to the fairy's comment: "Lord! What fools these mortals be!". Humanity is now under a malignant enchantment caused by "numbers money". Let us hope that we shall awake from our dream to enjoy a happy ending, as theirs did for the lovers of "A Midsummer Night's Dream".
